You must be using a kernel previous to 2.0.36... earlier kernels have problems atodetecting memory above 64 megs, since the bios doesn't report more then 64megs.
What you have to do is to put "mem=128m" on the command line to the kernel. You can type this by hand at the LILO: prompt, i.e. LILO: Linux mem=128m If you use lilo, you might be able to use the "append" keyword in your lilo.conf to automatically do this. Or, just get a newer kernel; 2.0.36 should autodetect memory and should be fully compatable with late 2.0.* kernels. You can install this kernel as a deb package; look in the archives about this. Carl